\u3000\u3000 Zhejiang Supcon Technology Co.Ltd(688777) (688777)
Core view
The annual revenue and performance exceeded market expectations. The company released the performance express of 2021, and achieved a revenue of 4.519 billion in the whole year, with a year-on-year increase of 43.1%; The net profit attributable to the parent company was 578 million, with a year-on-year increase of 36.5%, and the net profit deducted was 452 million, with a year-on-year increase of 39.1%. If the impact of share based payment is excluded, the net profit attributable to the parent company was 633 million in the whole year. Based on this calculation, 21q4 company achieved a revenue of 1.597 billion in a single quarter, with a year-on-year increase of 46.5%, and a net profit attributable to the parent company of 245 million, with a year-on-year increase of 34.6%. The growth rate of revenue and performance in a single quarter increased month on month.
The demand of the industry is strong, and the advantages of the company’s products are increasing. In the past 21 years, the digital transformation of China’s process industry has been further upgraded. The demand for high-end automation, digitization and intelligence in the manufacturing industry is rising, and the demand of downstream customers is strong. At the same time, the company has actively increased R & D and accumulated product and technical advantages. During the reporting period, through the new service mode of Wuxi Online Offline Communication Information Technology Co.Ltd(300959) of 5S automated housekeeper and S2B platform, the company achieved an increase in the customer coverage of process industry and broke through multiple large customers. The company’s advantageous products, industrial automation control system products, continued to expand market share, achieved high order growth, and the overall solution business of key industrial software and intelligent manufacturing grew rapidly, Thus, the income and profit of the current period have achieved rapid growth.
Acquire PCCW to realize complementary advantages. The company plans to acquire 22% equity of Sinopec Yingke with cash of RMB 560 million. PCCW has many years of technology accumulation and implementation experience in petroleum, chemical and oil and gas industries, deep cultivation of operation digital technology (ERP), process mechanism model, etc. on the one hand, it can improve the company’s ability to provide upper management solutions. On the other hand, PCCW has a very in-depth cooperative relationship with the design institute, Accumulated a large number of process mechanism models and equipment models in the petrochemical field. Contribute to the layout and rapid development of Zhejiang Supcon Technology Co.Ltd(688777) 5t strategy. In 2020, PCCW achieved a revenue of 2.705 billion and a net profit of 208 million. If the acquisition is completed, it can not only increase the performance of central control, but also realize complementary advantages and coordinated development between the two sides.
Profit forecast and investment suggestions
After slightly adjusting the income growth rate and expense rate, we give the company EPS of 1.16/1.54/2.01 yuan for 21-23 years respectively (the original EPS was 1.13/1.43/1.78 yuan). According to the 22 year PE level of comparable companies, the corresponding 22 year PE is 55 times, and the target price is 84.70 yuan, maintaining the buy rating.
Risk tips
The risk that the investment of downstream customers is less than expected; Risks of R & D failure or failure to realize industrialization, etc
